# VIKLAI) COAL MERCHANT, PATIALA, ETC. ETC v. UNION OF INDIA & ORS

- **Citation:** [1984] 1 S.C.R. 657
- **Court:** Supreme Court of India
- **Decided:** 1983-10-28
- **Bench:** D.A. DesA1 ANDO. CmNNAPPA REDDY
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/viklai-coal-merchant-patiala-etc-etc-v-union-of-india-ors-8501
- **Pages:** 30

## Headnote

Conslit1ltion of India Art. 19(1) (g)-Freedom to carry on trade or
busines!-To exanzine whether restriction imposed 1easonable-:-Court to find out
trade affected and keep in· view direct impact of r'estriction on trade and not
ancilfary or indirect "e.ffec't.
Indian Railways Act, 1890-Sec. 27A-Interpretation of-rVhether v;W/ativc
of Art. 19(/)(g) of Con~titurion. ·preferential Traffic Schedule laying dolt'n priorities
for movement of drfferent J:Oods issued by the Ministry OJ Railways under
sec. 27A-Validi/y of-Wheth~r ultra Vire~ sec. 27A-Whether ultra Vires Arts. 14
and 19(1) (g) of tire Conslitulion. ·
·
•
Indian Railways Act, 1890, section 28-lnterpretation of-Ministry of
Railwa)'S order dated April _I, 1972-U?/iether violative of sec. 28 and A1 t. 19( I) (g)
of th~ .Constitution.
Section 27 of the Indian Railways Act, 1890 cast a duty on the railway
administration to arrange for -receiving and forwarding traffic without 1:1nreason·
able delay and without partiality; Sectiqn 28 prohibited the railway
administration from giving undue or u.nreasonable preference or advantage to
ally particular person or railw~·adrninistration or any particular description of
traffic. Section 27A was inserted in the Act after 1950 to give power to the_
Central Governrr.ent to issue directions for giving speci3.1 facilities or preferenti3.1 treatment in transport of goods or class of goods consigned to the Central
Government or the Government of any State-or of such other goods or clasS of
goods as may b~ specified in the order.
The GovCtnment of India, Ministry of Railways issued aa order dated
April 1, 1972 containing its decision to add an abbreviation 'GX' below the
abbreviation 'G' in the list of abbreviations at page 14, Chapter VI of the IRCA
Alphabetical list of Railway·Stations in India and asking the railway administration to decide and notify the-names of stations to which this new provisions
would apply. Putting abbreviation 'GX' against a station meant that the station
was not open for outward booking of coa1, coal shale etc. in wagon loads.
Pursuant to this order; the abbreviation •a·X• was appended to all· way-side
stations in the coat.belt. Thereafter- Qovernment of India, ·Ministry of Railways
. by its order dB.ted April 27, 1972 revised ru.les J and 2 of the Eastern Railway
Coal Traffic Part L T\1.,;; r~Yi$~d rules provided inter a!ia that all ttatfi~ i9 coal
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SUPREME COURT R.EPORTS
[1984) 1 s.c.R.
etc. in. wagon loads will. be loaded only fr;~ colliery sidings, coke oven . plant8
_and washeries ~on the Eastern Railway, ·bui coal in wagons will not be permitted·
'at the stations serving these colliery washeries. A further restdctiOn followed
_with effect from December 4, t979 when the .Divisional Operating Superintendent, Bilaspur for apparent reasQnS stopped booking of coal in smalls includina
clubbing at all stations of North Eastern Railway.
On February 11, . J980, a
telegraphtc commup.ication was issued explaining that coal in wagon-loads can
be booked from colliery sidings by the collierJcS concern_ed.
~coking of slack
· coal was wholly stopped as per a phone <all dated April 9, 1981. In exercise of
the power conferred by sec. 27A ofthe Act, Union of India, the Ministry_ of
Railways·issued Preferential Traffic Schedule. The schedufe pre~cribed five
priorities 'A' to 'E' With inter se priorities amongst• A' to 'E' to .be accorded by
the railways fo~ transport of certain· .goods or class. of g<?ods specified under
each category. Different kinds of coal falls- under priority •C' (iii) which pro·
vides for movement of coal 'froin cOIJieries -in acc~rdance with programmes and
_movements -sponsored .or recommended by the Coal Controller and/or any
Cot11i1ittee appointed by him and/or the State Government• and/or other
recommending authorities and accepted by the Railway AdministratiOn·s -and/or
Director, Movement (Railways),. Calcutta, and in·acccirdance with the Zon_al
Scheme applicab

## Text

_Characters 0–39,993 of 78,421. This is a partial read: ask again with offset=39993 for what follows._

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657
VIKLAI) COAL MERCHANT, PATIALA, ETC. ETC.
v.
UNION OF INDIA & ORS.
October 28, 1983.
[D.A. DesA1 ANDO. CmNNAPPA REDDY, JJ.]
Conslit1ltion of India Art. 19(1) (g)-Freedom to carry on trade or
busines!-To exanzine whether restriction imposed 1easonable-:-Court to find out
trade affected and keep in· view direct impact of r'estriction on trade and not
ancilfary or indirect "e.ffec't.
Indian Railways Act, 1890-Sec. 27A-Interpretation of-rVhether v;W/ativc
of Art. 19(/)(g) of Con~titurion. ·preferential Traffic Schedule laying dolt'n priorities
for movement of drfferent J:Oods issued by the Ministry OJ Railways under
sec. 27A-Validi/y of-Wheth~r ultra Vire~ sec. 27A-Whether ultra Vires Arts. 14
and 19(1) (g) of tire Conslitulion. ·
·
•
Indian Railways Act, 1890, section 28-lnterpretation of-Ministry of
Railwa)'S order dated April _I, 1972-U?/iether violative of sec. 28 and A1 t. 19( I) (g)
of th~ .Constitution.
Section 27 of the Indian Railways Act, 1890 cast a duty on the railway
administration to arrange for -receiving and forwarding traffic without 1:1nreason·
able delay and without partiality; Sectiqn 28 prohibited the railway
administration from giving undue or u.nreasonable preference or advantage to
ally particular person or railw~·adrninistration or any particular description of
traffic. Section 27A was inserted in the Act after 1950 to give power to the_
Central Governrr.ent to issue directions for giving speci3.1 facilities or preferenti3.1 treatment in transport of goods or class of goods consigned to the Central
Government or the Government of any State-or of such other goods or clasS of
goods as may b~ specified in the order.
The GovCtnment of India, Ministry of Railways issued aa order dated
April 1, 1972 containing its decision to add an abbreviation 'GX' below the
abbreviation 'G' in the list of abbreviations at page 14, Chapter VI of the IRCA
Alphabetical list of Railway·Stations in India and asking the railway administration to decide and notify the-names of stations to which this new provisions
would apply. Putting abbreviation 'GX' against a station meant that the station
was not open for outward booking of coa1, coal shale etc. in wagon loads.
Pursuant to this order; the abbreviation •a·X• was appended to all· way-side
stations in the coat.belt. Thereafter- Qovernment of India, ·Ministry of Railways
. by its order dB.ted April 27, 1972 revised ru.les J and 2 of the Eastern Railway
Coal Traffic Part L T\1.,;; r~Yi$~d rules provided inter a!ia that all ttatfi~ i9 coal
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SUPREME COURT R.EPORTS
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etc. in. wagon loads will. be loaded only fr;~ colliery sidings, coke oven . plant8
_and washeries ~on the Eastern Railway, ·bui coal in wagons will not be permitted·
'at the stations serving these colliery washeries. A further restdctiOn followed
_with effect from December 4, t979 when the .Divisional Operating Superintendent, Bilaspur for apparent reasQnS stopped booking of coal in smalls includina
clubbing at all stations of North Eastern Railway.
On February 11, . J980, a
telegraphtc commup.ication was issued explaining that coal in wagon-loads can
be booked from colliery sidings by the collierJcS concern_ed.
~coking of slack
· coal was wholly stopped as per a phone <all dated April 9, 1981. In exercise of
the power conferred by sec. 27A ofthe Act, Union of India, the Ministry_ of
Railways·issued Preferential Traffic Schedule. The schedufe pre~cribed five
priorities 'A' to 'E' With inter se priorities amongst• A' to 'E' to .be accorded by
the railways fo~ transport of certain· .goods or class. of g<?ods specified under
each category. Different kinds of coal falls- under priority •C' (iii) which pro·
vides for movement of coal 'froin cOIJieries -in acc~rdance with programmes and
_movements -sponsored .or recommended by the Coal Controller and/or any
Cot11i1ittee appointed by him and/or the State Government• and/or other
recommending authorities and accepted by the Railway AdministratiOn·s -and/or
Director, Movement (Railways),. Calcutta, and in·acccirdance with the Zon_al
Scheme applicable to each field and the principles of transport rationalisation
in f0rce fr0m tin1e to time. Priority 'E', a residu~y clause again involves coal
fron1 collieries.
The petitione~ who· were coal mer~hants: alleged that. sum. total of
various rd'strictions including one dated Aprll 1, 1972 introducing "abbreviation
'GX' and the PrefeMntial.Traffi.c Schedulc•specifying priorities under sec. 27A
. (1) o'f the Act in their cumulative effect imposed a total ban on transport of
coal by the RailwaYs, at their instance and this action·was violative., of Art. ,14
and 19(1) (g) of the Constitution. The petitioners contended : (1) that the
Railway Admini~tration's action Of giving priority to some transporters o(. coal
denying use of its transport facilities to the petitioners whO were similarly
situated was disci'imlDatory in ch.aracter arid hence violative of Art.· 14 of the
Constitution; (2) the orders dated April 1, 1972, December 31, 1980 and April
11 1981 imposed unre~sonabie restrictions on the' the freedom Or the petitioners
to.carry on their trade guaranteed by Art. 19(1) (g); (3) that sec. 27A is violative
of Art. 19', l)°(g); ( 4) that para (iii) of priority 'C' of the Preferential Traffic
·Schedule in so far 3.s it permits special facility or ·preference to individuals or
groups of pe~ons selected by the sponsoring authority or recommending body "
for transport of coat is ultrn Yireiz Sec. 27 A of the Act; · (5) order dated April
11· 1972 was violative of sec. 28 of the Act and was also violative of Art. 19(1) (g)
of the Constitution.
·
Di~missing the writ.petitions,
HELD·: Railway is a mon!)polistic undettaking in the matter of.-tran.sport
of cOat by' railways. Barring some tiny dots which may become visible only by
a magnifying glass, ihe e~tire railway net work. is nationalistd and -ihe railway
is a departmeJ;J.t of the Uni~n of Jndia. · It is therefore, indispμtably a State
,JDonopoly. A monopoly unless kePt withi~ l::Qun~s may prove to be a menac~.
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YlkLAi> coAL MERCl!A~T ii. UNION
659
Therefore, regulatory measures are necessary to prevent the abuse of mono-...
polisti~ power. But there is a constitutional check on ihe State monoply,
namely, it being State within the meaning of Art .. 12. of the Constitution, all its
actions Will have to conform to the fundamental rights enshrined Part III in of .
. the Constitution. Sec. 28 of the Indian Railways Act seeks to achieve the same
result which on the advent of the Constitution, Art. 14 woul~ achieve. But Sec~
28 is subject to sec. 27A. If while giving effect to the orders of the Central
Government issued under sec. 27A, priority iS accorded in the matter of trans·
·port of goods consigned to Central or Si ate G ovCrnment or ·cl3.ss of goods
'specified in the .general or special order ·issued in thiS behalf, the action
of the· railway administration ib complying with such special or general order
could not be said as tentamountiog to gi".ing undue or unreasonable preference
or advantage to in favour of any 'particul'ar ·person or railway administration
and therefore violative of sec. 28. What sec. 28 fOrbids is discrimination in the
matter of transport of goods against a class but this is subject to the permissible
classification that would be introduced bY a special or gener~r orde.r issued by
the Central Government in .e;xercise of the power conferred by sec. 27A .
. It may be recalled that the Prefereritial Traffic Schedule according Priorit)'. •c•
to transport of coal by those rneiltiOned therein has been issued in exercise· of
. the power conferred by sec. 27 A. Therefore, the ·s~bmission· that petitioners in
the matter of transport of coal are similafly sitt ated with the Central or State
Govern1nent ·or transporters given priOrity by general ot. special order issued
under sec. 27 A cannot be entertained. This· is all the more so because the'
petitioners are coal merchants who want to transport their coal by railway for
carrying on business ill coal and they may sell the coal to any intendin8:...-purchaser while those accorded preferential treatment under Priority • C' of the
Preferential Traffic SchCdule are transporters of coal who have been recognised
One year in advance under Zonal Distribution Scl1eme as rersOns who would be
transporting the-coal to satiSfy fixed goals which subserve needs of the public
«t l~rge. Classification of those cowred by Priority ·re' and the present petiti ..
o~crs is founded on intellieible differentia which distin8uiShes pers:ons or things
that are grouped together from others left out of the group and the differentta
has a rational relation to the object sought to be _ acpiev~d by the impugned
orders .. Those fa1ling within Priority •c• (iii) Would 'from a class by themselves
and the petitioners. clearly stand out of tile group. (679 A-H; 680 A-El
Nav Rattanmal and Ors. v. The State of 11,ajasthan, (1962] 2 S.C.R. 324
referred to.
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Art. 19(1) (g).g.uarantees to the citi:Zen the fundamental freedon1 to carry
on any occupation, trade or business. This fundamental freedom is ·subject to
reasonable reStri~tions that can be imposed by law. relating to the carryin-g. on
by the ·state, or by a corpOration owned or controlled by the State, of any
trade._ business, -industry or service,
wh~ther to the exclusion complete or
partial, of citizens or otherwise. Whenever the Court iS called upon to examine
the complaint that restrictions imposed on the freedom to carry on trade are
unreasonable, it is necessary to find out what is the trade or bllsiness of the
complainant-petitioner and to what extent the restriction, if any, is imposed
upon· the _freedom tci carry on
trade or business and then to determine
whether the restriction is reasonable or otherwise. It ~s th('. ~irect impact of the
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SUPREME COURT REPORTS
[198411 s.c.!l.
restriCtion on the freedom to carry on trade·that has to be kept in view and not
the ancillary or inciden'tal effect of the KQverntnental action on the freedom to -
carry on tiade. [682 C-D; F-H]
In the instant case, if the law of den1and and supply and non--avaihibility
of facility for loading Coal in smalls at wayside stations result in not making
available 'wagons to the petitioners because of pre-planning and priority it cannot be said that there has been a total. ban oi;i the transport of coat offered by
the petitioners by railways, which would violate the fundamental .freedom to
carrY on their trade guaranteed to the petitioners under Art. 19(1) (g). Jf the
impugned orders constitute a restricticn on the·freedo .... 1 of carrying on trade,
-though it is n.ot considered to be so, the san1e is reasonable and imposed in
larger pUblic interest. Priffiafacie it appears lhaf the petitioners' businCss or
t~ade as coal merchants is no way interfered with bf the railways by not beiilg
able to provide transport facility. Let it not be forgotten that the railway is not
the only means of transport. There are.other means of transport by which the
coal can be transported by the petitioners to their respective place where they
carry on their business as the coal merchants. Even assuming that the direct'
impact of the policy laid down by the railway admi.(listration purSuant to the
orders of the central Govern~ent under sec. 27 A results in denial of allotn1ent
of wagon to the. petitioners, the restriction Will none·the-less be r·e.isonable
becaUse petitioners are not wholly denied the a11ot1nent of Wagons.
[681 H; 682 A·B; 683 .A·CJ
A developing ~oun~y with 'mixed economy and econ~n1ic planrling l1ave
certain targets. to achieve.
The~e targets are plann~d in advance and the economic activity is geared tO the achieverpilnt of these targets. If the required
·resources ne·cessary for achieving targets were readily available, no difficulty
would arise .. But a j:le, eloping country has to so distribute its sca.rce resou~es
to a,chieve and accorilPlish desired targetS: This situation is bound to lead to
a gap between the demand an~ supply of various facilities. Transport is one
such. Once there is a gap between the deman,d for transport service offered by
the railway and the supply of the service, the resources being not sufficient to
meet With all existing demands, the !tcarce resources will have to be equitably
distributed keeping in view the planned target. Thh equitable · distribution
would necessitate. impJ)osing of reasonabl& restrict!ons and according of
priorities: [683 J?-F]
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In the instant case, coal falls in Priodty 'C' (iii) in the Preferential Traffic
,
Schedule being the· Primary source of energy, Planned regulated movement of
coal to meet priority needs if it results in denial of that· facility to non .. priority
sector could not be rejected as placing an unreasonable restriction· on the. funda~
mental freedom to carry on trade or business. And that is the object underlying
sec. 27A.
Jt is therefore, idle to ~ontend that the section being violative of
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Art. 19(1) (g) is unconstitutional. [684 A-BJ
Annexure •B· to Prefefential Traffic Schedule sets out the list of sponsoring
auth~rities. The list shows that ths Central 'and State Governn1ents as well as
highly placed Central and StatC Government Officers ,have been appointed as
sponsOring authority in respect ·of coS;l,required by diffe~ent area and ind~stries.
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ViELAD COAL MERCHANT v. UNION
66i
· Again in various States various sponsoring outhorities have been set up by State
. Government. Power is conferred on these sponsoring authorities to sponsor
persons who would be accorded priority in transport of coal. These respo:Ilsible
persons and bodies set up in each ~tate as spon~oring authority are expected to·
act in a· responsible manner keeping in yiew the demands of the area and the ·
industry, for cOal in each State. It is, therefore, idle to contend that" setting up
. of sponsoring or recommending authority in Priority 'C' (iii) of the Preferential
Traffic Schedule is ultra v/rrs sec. 27A of the Act. [684,C-F]
The tr·ansport of coal is according to a plan drawn up a year in advance.
~ Further this plan is subject to the decision of the Standing-Linkage ·Committee.
Every meticulous detail is Worked out in advance. A daily loading of maximum
number of wagons is pre-planned. Loading _of the wagons.with coal at a targeted nilmber daily requires rotational movement also according to ·plan.
A w3.gon once loaded with coal when it moves out to the destination has a
certain average return time stipulated and worked out in advance. Jn order to
giv' effect to this planned moveμient abbreviation 'GX' is devised and appended
to all the railway stations informing the transporters that the station _is not
open for transport of coal in wagon loads. Coal in smalls can be· offered. for
transport that is what tbe pet.itioners do not desire. All the regulatory measure
clearly indicate that tranaport of coal is scientifi.Cally planned and devised in
advance. All the impugned orders a.fe made for effective implemeniation of the
planned movement of coal. If consistent with this planning, the railways have
stoj)ped booking of c()a1 in wagon·load from wayside station, it cannd't 6e said
that this reSulatory arrangement violateS sec. 28 of the Act and also that this•
action has imposed such an unreasonable restriction 'on the fundamental freedom
of the petitioners to carry on their trade aS'tO be violative of Art. 19(1) (g).
(685 A-B; F·H]
ORIGINAL JURISDICTION : W.P.Nos. 6822,7350,7351,7457-58,
7461, 7609-18, 7625, 7637, 7638, 7945, 7966-68, 8003-04, 8007-08,
8068, 8078, 8088, 8196-t!220, 8358-60, 8361-63, 8378; 8505, 8832-33,
8912, 8917, 8918,,19, 9083, 9110, 9135-36/81, 13, 36, 112, 159, 969,.
2163, 2641, 7089, 7685,. 8004, 8119, 8187-88, 9186 & 9187/82,
7462 63/82, 7765~67/81, 160, 180, 1503/82, 1919/8.1, 1/82, 868, 1270,
1358, 2256, 2272, 4051-4052, 5123-26, 7147/82.
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(Under article 32 of the Constitution of India)
Advocates for the Appearing Parties :
SS. Ray, N.R. Choudhary, K.K. Mohan, S.K. Sinha, R.C. Kohii,
· R.S. Sharma, S. Mitter, N.S. Das Bahl, E.C. Agarwa/a, A.K. Mitra,
H.K. Puri & K. Chatterjee, B. Datra, Rish; Kesh &
M. Chopra.,
S.C. Gupta'& M. N. Shroff, S.K. Ghosh, D. Goburdhan, P. Mo/uinty,
Abdul Khader, C. V. Subba Rao & Dal,_er Bhandari,
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SUPREME COURT REPoRTs
( 1984) I S,C.R,
The Judgment of the Court was delivered by
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DESAI, J. When the hearing in this group of petitions concluded
we pronounced the following order :
·
"All the Writ Petitions are. disinissed ·and any interim
order in each matter is hereby . vacated.
Jn the inatters
which are listed as ready, the petitioner shall pay cost to
·the respondents in ·one set in each petition and there will
· be no order to costs in the matters w4ich are shown as
unready .
Reasons will follow."
Here are the reasons;
The petitioners, in this group of petitions, under Art. · 32 of
D ' .· the Constitution are coal-.merchants, who, according . to them, have
.been denied the use of the railways for transport of coal . from various coalfields and way-side statioo1s to their destinations by the
illegal and unconstitutional action of the railway administration.
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·Constitutional conundrum invoked by them is the alleged violation
of Art.
14 in that w.hile certain transporters of .coal have been
accorded priority in the matter of transport o( coal such as
the
Central and the S\ate Governments and the sponsored and. recomm-
. ended transporters, the petitioners who are coal merchants were
denied equality of o.pportunity in the matter of transport of coal by
railway. Their further grievance is that total prohibition of booking
and transport of coal as requested by petitioners, by the railway
administration, an instrumentality of the ·state envisaged by. Art.
12
imposes an unreasonable restriction on their fundamental freedom to .
carry on trade'guarnteed by Art. · 19(1) (g) of the Chnstitution and
hence impugned orders are invalid.
· ·
There are different petitioners from different areas voicing
their grievance against action of different zonal railway administrations·but the running thread in the catalogue of grievances is the
sam~ and therefore a few representative facts to appreciate the contention as set out in Civil Writ Petition No. 8003-04 by M/s Raniganj Coal Corporation & Ors. may be briefly enumerated. This
petition is adopted a,s represe!1tativc for the additional . reason that a
yery comprehensive counter affidavit has bee·n filed·in it on· behalf of
the respondents.
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VIKLAD COAL MERCHANT v. UNION (Desai, J.)
66~
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Petitioners aver.that they arc coal ·traders and undertake
· supply of coal and coke throughont India but in particular in the
States of Punjab, Haryana and the Union Territory of Dclhj. They
carry on the additional bu'siness of supplying 'lack coal purehased
from .private collieries situated in the State of Meghalaya. In
order to move coal from the c_ollieries to consumers, petitioners have
to- transport coal from various stations served ·by· North-Eastern
Frontier Railways (Meter gauge) New Gauhati and Badarpur Ghat
in Silchar District in the State of' Assam and Meghalaya.
For the
purpose of transporting coal they have to indent wagons .as they
want to transport coal in wagon-loads as the expression is
under·
stood in contra-distinction to smalls and clubbing. They submit
indent for wagons according to the procedure prescribed .in the rele·
vant rules. Petitioners aver that prior fo April I, 19~2, there wa~ no
restriction on booking of.coal in wagon-loads. : The Govt. of India,
Ministry of Railways issued an order dated April U 972 which
reads as under :
·
"Govern~ent of India (Bharat Sarkar)·
Ministry of Railways (Rail Mantralaya)
Rai\way Board
.No. TCR/15.10/71
The Genera) Manager
11, India Railways
New Delhi dated· Ist April 197J
I 2~b Chaitra, 1894 . .
....
.
.The R.ailways Board have decided that in the list of
abbreviations at page• 14 Chapter VI of the IRCA Alphabetical list of Railway Stations in India · (corrected . upto
31.3.79) an additional entry below the abbreviations 'G'
should be incorporated· as under :
OX-Open for.goods, traffic of coal descriptions .
excluding livestock, horse; large animals such as
camels; elephants. etc. carriages on their wheels and
motor cars but not open for outward booking of coal,.
coal shale; lignite, patent fuel, shoft coke and hard _
coke in wagon loads.'
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S!iI'ilEME COURT REPORTII
i1984) 1 S.d.ll.
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The Railway Administrations are hereby · directed to
· decide and notify the riames of stations to which this new
provisions would apply and advise the General Se<:retary,
. l.R.C.A. accordingly.
The General Secretary l.R.C.A. on receipt of the
advice from the Railway Administrations should arrange
to issue the necessary corrections, to the alphabetical list
of Railway Stations.
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Sd/· P.N Kalra,
Dy. Director, Traffic (Rates)
Rly. Board, New· Df'lhi, dated
1st April 72/12 Chaitra 64"
.This is one of the. impugned orde;s in
these petitions. The
abbreviation IRCA used in-the impugned order means Indian Railway
Conference Association ('.!RCA' of short). The . IRCA has compiled and.issued an alphabetic list of All India Railway Stations and
by a .suitable abbreviation as shown against the name of each railway
station iri4ication is given about the facilities for traffic both goods
and passenger available at different stations.
As per the impugned
orier. when abbreviation 'GX' is appended to any railway station_it
would inter·alia mean that the station is not open for outward booking of coal, coal-shale' etc. in wagon-loads. It appears th~t the abbrevi-
' ation 'GX' has been appended to all way-side stations in the coal-belt,
cons~quently no rnilway station in the coal-belt would be in a posi·
· tion to book coal in wagon-loads from each such station. Conse·
quet\t upon the issuance of the impugned notification, tbe Govt. of.
India revised Rule 302(i) of the Goods Tariff No .. 33 Part I issued by
IRCA. - Further, the Chief Commercial Superintendent, Eastern
Railway by a circular dated April 15, 1972 informedthe_ station
sup_et'intendents and station-master~ of all the stations served by the
Eestern Railway that the entry 'OX' should be appended to all the
·stations within its jurisdiction. Thereafter-Govt. of India, ministry
of Railways by its order dated April 27, 1972 issued an order revising
Rule I and 2 of the Eastern Railway Coal Traffic Part I as under :
H
"All Traffic in coal, coal-shale,. lignite, patent fuel,
soft. coke and bard coke in wagon loads · wilJ be loaded
oniy from Colliery sidings, coke oven plants and waslie·
•
Viki.AD COAL MFRCHANT v. UNION (Desai, J.)
.. 665
ries on the Eastern Railways. Though invoices may be •
issued as from the stations serving these colliery washerfos
and coke oven plants, loading of coal in wagons will not
be permitted at those stations. Loading and booking of
coal is also.not permitted from any other station on the
Eastern Railway. This traffic will be booked under the
following forms of invoices :.-
a) "Weight only" invoices showing the weight and rate
but not the calculated freight.
b) "Paid" invoices .
•
c) "To p_ay"· invoices.
2. Coal will.be booked under "Paid" invoices only on
the written request of the sender despatching the coal
and provided the freight is tendered at the time of
A·
B
c
despatclt.
, D
,
t wagons will be allotted only ·an availability and will
be subject to observe of priority and other Rules that are
in force."
A further restriction followed when the Divisional operating
Superintendent, Bi)aspur for apparent reasons stopped booking of
. coal in smalls including clubbing at all stations
of_ North-Eastern
Railway.
This restriction came into force on December 4,
1979.
On February 11, 19so·a telegraphic communication was issed explain•
ing that coal in wagon-loads can be booked· from colliery sidings. by
the coalieries concerned. In other words, the coalieries booking the
wagon must specify its hame in the indent Booking of slack coal was
wholly stopped as per a phone call dated April 9, 1981. Petitioners.
further contend that Union otindia, Ministry of Railways has issued
Preferential Traffic Schedule in exercise of power conferred by sec.
27A of the Indian Railways Act, 1890 ("Act' for short). This Preferential Traffic Schedule provides for preferential treatment iil transport
of good.s from various stations. ·It p(ovides five inter se prorities A
to E.
Different kinds of coal falls undCr priority 'C' (Ill) which
reads as under:
(iii) Coal from collieries in accordance with commodity
quotas laid down from time to time for /certain types
E
F
G
H
c
D
F
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H
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666.
SUPREME COURT IUiPi>RTS
[1984r 1 s.c;a.
· · of coal and/or in accordance. With programmes and .
movements sponsored or recommended by the Coal
Controller and/or any Committee appointed by him
. and/or.the State Governments• and/or other reco·'
mmending authorities and accepted by the/Railway
Administrations
and/or
Director,
Movement
(Ra'ilways), Calcuita, and in accordance with . the
· Zonal Sche~e appli(!able to each field a~d the pri~ci·
pies of transport rationalisation in force from time to
time. A list of sponsoring authorities authorised to
sponsor coal movements in this item is given in
Annexure 'B'.
•
. Note- (a) Coal in the above item C(iii) means "Coal as defined
in.Colliery Control Order."
•
•
(b) Besides the sponsoring authorities mentioned in
Annexure 'B' movem·ent of Coal may ,be sponsored
by "any other authority who ·maybe appointed by
the Governinent from time to time."
••
(c)· Recommendatlon for allotment of wagons by a spon·
soring authority or acceptance of recommendations
or issue of sanction by the Railway Administration/
Director, Movement (Railways) does not guarantee
allotment/supply of wagons. Allotment/supply of
wagons
would be regulated according .to
the
·availability of Coal/transport.and according to opera' .
tional exigencies from time to time. ;\llotmentisupplies ·
of wagons may be cancelled or reduced by Director,·
Movement (Railways).
(d) The period of validity of programmes/sanctions for
rakes/piece-meal movement may be laid 'down from
time to time by Railway Administration/Director,
Movement (Railways): The validity of programme/
sanction does not ·guarantee alfotment/supply of
wagons ...
le)., lnterse seniority. of the class of censumers would be
' · laid down ·from time to. time· by Railway Adminis·
!ration/Director, ·Movement (Railways) and may be
\
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r!-
l.
/
. '
•
VIKLAD COAL MERCHANT v. u.NION (De6ai, J.)
altered/modified from time to time .• Within the same
class or category of consumers seniority may be fixed
from time to iime depending upon ihe 'operational
and other considerations.• .Rai\wai Administration.I
Director, Movement (Railway) may permit distress
allotmentslsupply of wagons when considered nece-
·ssary'. ·Nothing laid down herein shall be considered
as contrary to· notes (a) to (b) appearing under
Priority 'E'." -
667
Priority 'E' also includes coal from collieries in accordance
with targets laid down from time to time from the different fields
and in accordance with the zonal scheme applicable to each field and
the principle of transport rationalisation already in force. Petitioners
contend that ·sum total of various · restrictions including one dated
April 1. 1972 introducing abbreviation 'OX' and the Preferential
Traffic Schedule specifying priorities under section 27 A of the Act
in their cumulative effect impose a total ban on transport of coal by
the Railways, at their instance and this action is violative o( Art. 14
· a.nd/19(l)'(g) of the. Constitution.
A very detailed affidavit bas been filed on behalf of the respon:
dents·.
Some ·of its highlights may be noticed. .
•
·111dian Railway net-work serve 7000 railway staiions, scores
of divisioi{s and 9 zones. ·In such an extensive net-work, all kinds
·of factilities by their very nature cant)ot be provide<\ at all stations,
·nor can all kind.s of traffic be lifted and moved from all stations.
The Railways, have therefore to plan and rationalise movement of
various commodities from various loading points to various destina,
tions and in various directions. It is said that till recently coal was
the primary source of energy._ It bein.g an important commodity it
bas t..o be accorded such high priority being . the primary source of .
energy, that a senior omcer called Direttor, Movement (Railways) is
posted with headquarters at Calcutta and he controls and co•ordinates
all movements of coal by rail.
As far back as 1945, the· Ocivt of
. India by its resolution No. Coal 119 (I) dated December 4, 194S
appointed a' Committee called the Indian Coalfields Committee which
submitted its report in 1946. ·Amongst various other recommen··
dations, the Committee suggeste<i that in view of the shortage of
transport, it is imperative that increased attention be given to zonal
A
B
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A
B
c
D
E
F.
G
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668
SUPRBME COUl\T RBPORTS
(19841 j S.C.R
distribution of coal. It further notices that coal is invariably transported in full wagon-loads and at times despatched from depotstations in full train loads and the'refore if any general revision' of
freight is undertaken in consequence of increased cost of operation of
the railways, the preferen'tial treatment now accorded to coal should
be maintained.
Statistical data relied upon in the report was
annexed to the counter-affidavit. It ·is averred that railway has· to
rationalise movement of coal because daily on an average l 0,000
wagons are required for movement and transport of .coal all over the
country.
111 order to explain why booking of coal from way-side
stations is prohibited, it is averred that the Dir.ector, Movement
(Railways) assesses the likely availability of wagons in a coming year
for the movement of.coal. After ascertaining the available capacity
he advises Central Govt. and various State·Govts. with a request to
sponsor coal traffic as per the requirement and policies. The whole
programme of transport of coal from coalfields and coalieries to various points in Tndia is worked.out in advance keeping in. view the daily
despatch of loaded wagons and re_turn of enipty wagons so as to be
available for daily requirement of empty wagons.
A chart is annexed -
to this counter-affidavit in which the average loading of coal in
wagons per day iil set out. :Jn a letter dated December 21,1981 by
the Director, _Movement (Railways) to Chairman of the Railway
Board, it is stated that coal loading. the month is 1.0,478 per day
compared to 10,121 wagons per day during October, 1981. .A
compartive breakage of loading during some months has· been set
out. showing the number of wagons indented, the number of wagons
allotted and the number of wagons loaded and the percentage of
loading against offer.
It is also stated in the counter-affidavit that
the Department of Coal, in the Ministry of Energy bas set up a
standing linkage committee whose fuctions to assess and link the
requirements to particular sources of coal so as to provide this
primary energy material to establishments like the Railways, Thermal
Power Stations, Fertiliser Plants, Cement Plants, Steel Plants, Textile
factories, Chemical Industries and like. The Committee assesses the
requirements of various industrial units, consumers establishments
and other consumers located in different parts of the
~ountry and
thereafter taking into account the. production programme of various
collieries, it links the requirements of various consuming units to
· different individual coal-fields, and this linkage is reviewed frm time to
time as the situation may necessitate. The availability of wagons
is an in.tegral part of this linkage programme.· After specifying these
facts, it is averred that this annual allotment drawn in advance
\
...
V!KLAD COAL MERCHANTS Y. UNION (Desai, J.)
~69
cannot be disturbed by casual indent for transporting coal. It is
further averred that the railway is a carrier which has to chop its
own priority programmes keeping in view the public interest of,
rushing various commodities to different parts of the country. If' in
the process some individuals may not get a chance to transport their
commodities, the actio~ of the railway administration is neither
violative of Art.
14 or 19 (I) (g) of the Constitution.
.,
There are some averments in the counter-affidavit casting some
doubt about the trade carded on by the petitioners but we consider
. the same irrelevant for the purpose of disposing of these petitions.
•
A
B
A number of learned counsel addressed the Court on different
C
facets of almost the same identical contentions.
We would, however,
only deal with the basic contentions raised in these petitions.
.
.
At the outset, a brief reference to some of the provisions of the
Act would facilitate the examination of the· contentions canvassed
before us.
Sec. 27 of the Act casts a duty on tb_e railway administra·
tion to arrange for receiving and forwarding Q"affic without unreason·
able delay andwithout partiality. Sub-sec. 1 of sec. 27 reads as" under:
""27). Duty of railway administrations :10 arrange for
receiving and forwarding traffic without unreasonable
delay and without partiality :-:
(I) Every railway adminisration shall, according. to its
powers, afford all
reasonable
facilities for the
receiving, forwarding and delivering'of traffic upon
and from th.e several railways belonging to or worked
by it and for the· return of rolling-stock."
Sec: 27 -A which was introduced by the Amending. Act No. .11 of
1950 confers power on the Central Govt. to give directions in
regard to transport of goods by railway administration. It reads
as under:
"27 A. Power of Centrar Government to give directions
in
regard
to
transport of goods by railway .
administrat1on·(I) The Central Governm.mt may, if
in its opinion it is necessary in the public interest so
to
do, by general or special order, ·direct any
railway administration- '
.
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A
B
c
D
.E
F
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670
SUPRl!MB COURT REPORTS
· [1984) l s.c.ll.
(a) to give special facilities for, or. preference to, the
transport of ·any such goods or class of goods
consigned to the Central
Government . or to the
Government of anY State or of such .other goods or
. class of goods, as may be specified in the order;
(b) to carry any goods or class of goods by such route
or route~ and at such rates as may be specified in
. .
the order.
(2) Any order made under sub·section (1) shall cease to
have effect after the expiry of six months from the
d~te thereof, but it · may be renewed from time
to time.
(3) Notwithstanding anything contained in this Act,
every railway
administration shall be bound to
comply with any direction .given under sub-section
(I). any action taken by a railway administration
in pursuance of any such direction shall not be ,
deemed to be a contravention of Section 28."
'-
Section -2~ prohibits giving undue preference by railway administration. It reads as under :
•
"28. Prohibition of undue preference:-A railway administration shali not make or give any undue or unreasonable prefei'nce or· advantage to, or .in favour of,
·any particular p~rson or · railway administra.tion, or
any particular description, of traffic~ in any respect
whatsoever, or subject any particular person or
rai!~ay administration or any particular description
of traffic to any undue or unreasonable prejudice or
disadvantage in any respect whatsoever."
In exercise of the power conferred by Sec. 27A Central Govt.
issued Preferential Traffic Schedule directing that all railway adminis-
.. trations shall give special facilities for or preference to the transport
of goods ·or class of goods specified in the Schedule to the
order.
Amongst Priority ~A' to 'E' there is inter se priority and when unde;
one Priority various goods or class of goods arc . clubbed together
they have inter se priority- amongst themselves. Coal falls
under
•
. ,.
VllllLAD COAL l,!EiCHANT v. UNION (Desai, J.)
671
. •·
Priority ·c•. Coal has to be moved. from collieries in accordance
with commodity quotas laid. down from time to time for certain
A
types of coal and/or in accordance with programmes and movements •
sponsored or recommended by the Coal Controller and/or any
Committee appointed by him and/o.r the State Governments, and/or
other recommending authorities and· accepted by the Railway
administrations and/or Director, Movement (Railways), Calcutta and
B
'in accordance with the Zonal Scheme applicable to each coal-field
from time to time. A list of sponsoring : authorities authorised to
sponsor coal movements under priority C(iii) is set out in Annexure
'B' to the Sched~le. ·The expression 'coal' has' the same meaning as
defined in the Colliery Control Order. There is a further provfoion
under Item (iii) that besiaes the sponsoring. authority mentioned in
C
Annexure B, movement of coal may ·be sponsored by' 'any other
authoriiy who may 'be appointed by the Govt. from time to time."
' .
.
Sec. 27provides for smooth flow of traffic throughout. the.
length and breal!th of the country._ The expression 'traffic' is defined
to include rplling stock of every description as well as passengers,
animals and goods. A duty is cast on every railway administration
to afford reasonable facilities for receiving, forwarding and delivering of traffic upon .and from several railways beloμging to or
worked by it and for the ret-urn of rolling stock. This is necessary
because the railway net work is divided into various railway ·such as
Western Railway, Central Railways, meaning zonal railway administration and prior to nationalisation of the railways different companies operated different railwnys.
Sec. 27 wa~ ena,cted in the last
decade of 19th Century when different compani~s had set up the
railway net work in different parts of the country, In order to . provide for. smooth flow of' traffic thwarting the railway administrations
creating their own preferences, throughout the length and breadth of
. the country it was made obiigatory by Sec. 27 that every railway
railway administration shall_afford reasonable facilities for receiving,
forwarding and delivering traffic and for return of the rolling stock.
Sec. 27-A was introduced in 1950 with a view to conferring power on
the Central Govt. to give directions in regard to transport of goods
·by railway administration .• In 1950 railways· were the primary.
carriers of passengers and goods throughout the length and breadth
. of the country. Road transport was then in its infancy and river
navigation was practically unknow.n. On the advent of the independence and as a resuH of planned economy, there was a spurt in
industrial activity with the result that demand from the ~railways for·
D
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ff
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A
D
E
.F
G
H
672
S\)PRBME CO\)RT REPORTS
il984] l s.c;R.
·roiling stock es.cafated. VarJous projects w'e;e.beirig set up in diffe·
.
)
rent 'parts of the country which necessitated· un-interrupted llow ·of ' ·
goods for speedy completion of the projects,
By, 1950, Constitution
became 'operative,
Art. 14 loomed larged so that ilnless a specefic
. power was. taken for serving larger pubiic interest, the railways, ·an -).
instrumentality of the State would be guilty of violating Article 14 if
.it did not afford the same facility for transport of goods. by individauls agairlst the state requirements as also . priority requiremenis.
In order to arm the Central G'ovt. with. power to give directions for
. according special facilities, or preferential tre?tment in transport of .
·goods or class of goops consigned to the Central Govt. or the Govt.
· · of any State or of such other goods or . class of goods as· may· be.
specified in. the order, Sec. 27 A was introduced in the Act. It also
conferred power on the Central Govt.